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Supreme Court Rules That Arbitrators Can Apply Employment and Human Rights Statutes During Grievance Proceedings

In the recent decision of Parry Sound (District) Social Services Administration Board v. O.P.S.E.U., Local 324. The Supreme Court of Canada has ruled that arbitrators have both the power and the responsibility to enforce the substantive rights and obligations of the Human Rights Code and the Employment Standards Act.


The grievor was a probationary employee who was employed as a counselor by the Parry Sound Social Services Administration Board. She was dismissed shortly after returning from maternity leave. The union filed a grievance alleging that the dismissal was discriminatory on the basis of family status. In response to the grievance, the employer argued that under the collective agreement, a probationary employee could be discharged at the sole discretion of the employer. The collective agreement stated that a probationary employee could be discharged at the sole discretion of and for any reason satisfactory to the employer and that such action was not subject to the grievance and arbitration procedures.

In her decision, Arbitrator Paula Knopf noted that the collective agreement did not impose any restrictions on the right of the employer to discharge a probationary employee, but nevertheless concluded that jurisdiction was conferred on the arbitrator by the combined effect of section 5(1) of the Human Rights Code (“Code”), which prohibits discrimination in employment, and section 48(12)(j) of the Labour Relations Act (“LRA”) which grants arbitration boards the power to interpret and apply human rights and other employment-related statutes. The arbitrator found that theLRA required collective agreements to be interpreted in a manner consistent with the Code.

The Divisional Court overturned the arbitrator’s decision, finding that the collective agreement language precluded the arbitrator from considering the grievance. The Court ofappeal for Ontario set aside the Divisional Court’s decision on the basis that section 44 of the Employment Standards Act (“ESA”), which prohibits an employer from dismissing an employee merely because the employee takes pregnancy or parental leave, is expressly incorporated into collective agreements by 64.5(1) of the ESA. The Court of Appeal held that since section 44 applies to both probationary and non-probationary employees, it prevails over conflicting collective agreement language, which precludes a union from grieving the dismissal of a probationary employee.


The Supreme Court upheld the original ruling of Arbitrator Knopf. The Supreme Court rejected the argument that an arbitrator can apply human rights legislation only when jurisdiction exists by virtue of an alleged violation of the terms of the collective agreement. Writing for the majority of the Supreme Court, Justice Frank Iacobucci found that the broad rights of an employer to manage operations and direct the work force are subject not only to the express provisions of the collective agreement, but also the statutory rights of its employees.

Justice Iacobucci acknowledged that while the parties agreed that the collective agreement did not expressly restrict an employer’s right to discharge probationary employees, section 5(1) of the Code is an implicit term in all collective agreements, thereby making the discharge of the probationary employee a violation of the collective agreement and thus an arbitrable matter. Justice Iacobucci also held that sections 44 and 64.5(1) of the ESA are implicit in all collective agreements and would also give the arbitrator jurisdiction to consider the grievance.

Noting the advantage of both the accessibility of grievance arbitration and the expertise of arbitrators, Justice Iacobucci stated that grievance arbitration process would increase the ability of employees to assert their right to equal treatment without discrimination, which would likely result in more compliance with the Code.


Although the ruling in the Parry Sound decision is important, the decision may not have significant impact on the many existing collective agreements that incorporate the discrimination provisions of the Human Rights legislation into the agreements. Many collective agreements already contain terms prohibiting discriminatory conduct, which would make the discharge of a probationary employee an arbitrable matter. However, the decision does bolster human rights protection for all employees and expands the jurisdiction of arbitrators and may therefore result in more grievances being filed by probationary employees alleging a discriminatory termination.

What is notable in the Supreme Court’s decision is the failure of the Court to express any comments on whether employers could be exposed to both grievance arbitration and other statutory proceedings at the same time. The lack of commentary on this issue may give rise to the need for further clarifications from the Courts. Pallett Valo, LLP will be monitoring this area of grievance arbitration closely.

The purpose of this document is to provide information as to recent developments in the law. It does not contain a full analysis of the law nor does it constitute an opinion of Pallett Valo, LLP or any member of the Firm on the points of law discussed.

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Andy Balaura

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